“We’re going to see this economic system spinning out of control and destroying itself” Richard Wolff

We’re besieged with economic and political theatre, anything to distract us from confronting an economic system that doesn’t work for the majority.

No 2195 Posted by fw, April 3, 2018

Paraphrased – “Roosevelt saved capitalists from themselves. But they were enraged by the way he paid for Social Security and unemployment benefits — by taxing corporations and the rich. The very idea that a politician would do this to provide for the mass of people. But, it was not the road to his political oblivion – Roosevelt was re-elected three times. After the war, the reaction of the business community was to destroy the coalition of unions, communists, and socialists. First they went after the communists, converting them from militants to agents of a foreign power [the Soviet Union]. Then they told the people that socialism is just like communism but spelled differently. Then they went after the labor movement, which has now been on a 50-year decline. The irony is the capitalists not only got rid of the coalition that opposed them, but also they got rid of the very mechanism that Roosevelt told them would save them. We now have a crisis since 2008, with no possibility of reviving mass movements because they were so systematically crushed. Consequently, we have a capitalism spinning out of control. Trump is like the cartoon alternative to Roosevelt, on a rush to make capitalism even more grandiose and excessive. I wonder how long this can last?” —Richard Wolff, On Contact, RT America

In this 28:27-minute video interview, Richard Wolff, an American Marxian economist, Professor of Economics Emeritus, University of Massachusetts, Amherst, and frequent guest on progressive online news and information programs, reviews evidence of the decline of the US economic system.

Among the topics covered in this interview by Chris Hedges, are these, captured by my added subheadings:

In the US, capitalism has become an economic system that can’t deliver what it promised

America’s “Golden Age of Labor” after WW2?

After WW2, US capitalists crushed the coalition of unions, communists, and socialists

Misleading the American public with deliberately distorted unemployment numbers

US private economic sector is not functioning in a socially acceptable way

Winners and losers of Trump’s tax cut

Capitalism in America is hollowing itself out, capitalists digging their own grades

Trump’s tariffs are a vehicle for political theater

Without a people’s movement, this economic system will spin out of control and destroy itself

The system is unsustainable and potentially explosive

Everything is done to avoid asking the question – Is capitalism the problem

Trump is doing all he can to “grab it all before it disappears”

Below is the embedded video of the interview, along with my chronological index of my notes to facilitate quick access to selected sections of the video. My notes offer a mix of verbatim and paraphrased text. To watch the video on RT America’s website featuring Chris Hedge’s On Contact program, click on the following linked title.

00:00 – 01:34 — Chris Hedges (CH) –Introduction. Income inequality in US. Salaries of CEOs of top corporations. Income inequality is global. What does it mean? What are its consequences? How did it happen? How much worse will it get?

In the US, capitalism has become an economic system that can’t deliver what it promised

01:34 – 03:05 – Richard Wolff (RW) — Capitalist system has been growing dominant system for last 300 years presented itself as the system that creates massive middle class // Now that it has become the global system we have the exact opposite // Reproduced grotesque inequalities // Has become a system that couldn’t deliver what it promised // Now bent on distracting everybody on the harsh reality // We’re besieged with economic and political theatre // Anything to distract us from confronting an economic system that doesn’t work for the majority

03:05 – 03:15 — (CH) – The assault is being exacerbated by the new tax code

03:15 – 04:19 — (RW) – New tax code is explosive excess // We’ve has 30-40 years in which corporations have paid less taxes, made more money, kept wages stagnant while productivity rose

America’s “Golden Age of Labor” after WW2?

04:19 – 04:43 — (CH) – What do you make of America’s “Golden Age of Labor” after WW2, lasting for a couple of decades, a well-paid working class where they could be part of the middle class

04:43 – 05:40 — (RW) – Why did it happen? It happened because the last time capitalism crashed in ’29 we had a different response than what you see now // The mass of working people joined unions, which they saw as a way to get through the depression // And they joined socialist and communist parties // You had a mass uprising of victims of capitalism giving Roosevelt and the political elite and ultimatum // Either help us or there will be a revolution // He got the message and created Social Security, unemployment compensation, the first minimum wage and public employment // When you do all that you create a real pushback against capitalism’s basic tendency towards inequality // We had a few decades of the results of that

06:24 – 06:50 – (CH) – The irony is that Roosevelt said that one of his greatest achievements is that he saved capitalists, that adjusted a collapsing system and he did save it // And yet ever since 1948 with Taft-Hartley – a draconian bill that makes it hard to organize going forward – the capitalist class sewed the seeds of their own destruction

After WW2, US capitalists crushed the coalition of unions, communists, and socialists

06:50 – 08:49 — (RW) – That’s the irony. He saved them from themselves // But they were enraged by the way he paid for Social Security, unemployment was by taxing corporations and the rich // This notion that a politician would do this to provide for the mass of people // It was not the road to political oblivion – Roosevelt was re-elected 3 times // After the war, the reaction of the business community was to destroy the coalition – unions, communist, and socialist // First go after the communists, convert them from militants to agents of a foreign power (Soviet Union), then tell everybody that socialism is just like communism, then go after the labor movement which has been on a 50-year decline // The irony is the capitalists got rid of the coalition that opposed them, but also got rid of the very mechanism that Roosevelt told them would save them // We now have a crisis since 2008 without the possibility of reviving mass movements because they were so systematically crushed // Consequently, we have a capitalism spinning out of control // Trump is like the cartoon alternative to Roosevelt // Trump’s on a rush to make capitalism even more grandiose and excessive // I wonder how long this can last?

08:50 – 09:16 — (CH) – That is the question // Removing the very tepid reforms off Wall Street speculators, the global banks – What’s going to happen? // Address how the figures that they use to justify what they call a recovery are fictional.

Misleading the American public with deliberately distorted unemployment numbers

09:16 – 11:13 — (RW) – If you do fake “advertising” in place of proper economic analysis, you end up giving the public misleading data to show a recovery of the 2008 financial crisis // Number 1 – the unemployment number that the government loves to talk about – the way unemployment numbers are gathered in America is you ask a lot of people 2 questions: “Are you working? If they say “Yes”, they’re counted as employed; If they say “No”, you ask them a follow-up question: “Are you looking for work? or “Are you not?” If you say you’re looking for work, you are counted as “Unemployed”; If you say you’re not looking, you are counted as “Out of the labor force” // If a significant number of people gave up looking for work because the jobs offered were so inferior to what they had before, or the jobs offered no security, then these people may have opted for job training, or went into the illegal economy, or began to live off their friends, relatives, and neighbors, then you are misled into thinking unemployment declined when the fact is the employment situation has deteriorated, leaving a smaller number of workers in the labor force to support the entire population

11:14 – 11:41 — (CH) – But it also does other things // If you work 28 hours a week at Walmart, you’re still below the poverty line // The Walton family which makes $11,000 an hour gives its employees forms for food stamps because they qualify // Even if you’re working 1 hour a week you’re counted as “employed”

11:41 – 13:07 — (RW) – Yes you are. You’re put in a “temporary” or “part-time” category; there’s endless games being played // Even the most rightwing of my colleagues admits that the quality of the job – its security, its benefits, its impact on your physical and mental health – all of that has been declining even as wages have remained stagnant // By any of those measures we’re not in a recovery, we’re in an ongoing decline which is why Trump got elected. // It’s happening to capitalism in Western Europe, Japan, and the US // It’s why an angry working class is looking for ways to express and change its circumstance // It’s sad that many in this country took the step of electing Trump // It’s sad that in Britain the working-class voted for Brexit – yes this gave the elite the middle finger but it didn’t solve their problem // the issue is to get the people who are upset to begin to understand that the target is what the folks who were upset in the 1930s understood – the target is the people at the top, the unfair tax structure, the way the economy was organized – that’s our problem

13:07 – 13:36 — (CH) – In essence we’ve lost control over our economy. You saw it with Thatcher and Reagan who began this shift with the deconstruction of the welfare state under Labor (in Britain) or the New Deal (in US) // The political rhetoric said this [welfare programs] is an assault on your national identity and epitomizes Trump’s response to the economic and political crisis

US private economic sector is not functioning in a socially acceptable way

13:36 – 14:40 — (RW) – When you have a welfare system, you are suggesting that the community/society as a whole has a responsibility to itself and that if the private sector can’t or won’t manage that then the public sector steps in – that’s what Roosevelt did // This is implicit in our system. If welfare is cut back, people are thrown into a total dependence on the private sector, which has now shown what happens to people who are thrown on a private capitalist system that cannot or will not function in a socially acceptable way

14:40 – 16:28 – COMMERCIAL BREAK

16:28 — 1652 — (CH) – The very minimal controls imposed by Dodd-Frank, everything is being eradicated, what will that do to the economy?

16:52 – 17:17 — (RW) – It produces what people used to want to celebrate capitalism for – that is, creating a middle class // Now it polarizes everything. It allows top executives to go crazy with their pay packages, not only beyond what\s reasonable, but even beyond what their fellow capitalists in other parts of the world allow

17:17 – 17:30 — (CH) – [Interjecting] – With this tax cut, what they did with that money was buy back their stock, which is suicidal for the economy. Explain why they did that and why it’s suicidal.

Winners and losers of Trump’s tax cut

17:30 – 18:22 — (RW) – This is a game in which there is a collapse of the mass ability of people to buy things. // A company that saves all this money through a tax cut for Trump is not going to spend its money hiring people, buying machines, and producing more when they’re having trouble selling what they already produce and they’re impoverishing the very people they would have to sell to. // So what do they do with the money instead? They take it and play for themselves. They run the society. They serve themselves. They give themselves higher pat packages. They do this by buying back their own stock, which drives up the stock’s price, which drives up their compensation, no jobs are created…

18:23 – 18:26 — (CH) – [Interjecting] – They’re often trashing their own company in the process – for example, the Lehman Brothers did that

Capitalism in America is hollowing itself out, capitalists digging their own grades

18:27 – 19:15 — (RW) – Because they’re out of control building a price of the stock that is going up even though the viability of the enterprise is shrinking // If you wanted a case for there to be any negative outcome even for their own thinking, it means the only growth in terms of real production is happening elsewhere in world because we’re killing the very mechanism that might have produced it here. // It’s a capitalism that’s hollowing itself out, but refuses to face it because it is making money for a while; they’re essentially digging their own graves.

19:15 – 19:21 — (CH) – Asks Wolff to talk about tariffs

Trump’s tariffs are a vehicle for political theater

19:22 – 22:27 — (RW) – Tariffs in this country at this time is a vehicle for political theatre. It is Trump’s way of distracting attention from an economic system that isn’t working for people. He wants people to focus on foreigners – a classic ploy of crooked politicians stuck with a problem of their won making, blaming somebody else. // He takes the poor 10 or 11 million immigrants in this country with questionable legal status and he demonizes and scapegoats them. // They couldn’t possibly account for the difficulties of this economy and throwing them out will not fundamentally change the dynamic of this economy. It’s good theatre. It’s another way to smite the foreigner. He wants people to get angry at China – they are the bad ones. People should keep 3 things in mind about tariffs: 1) Historically they don’t work very well; they’re very easy to evade; 2) It’s political theatre because it doesn’t change very much and it punishes American companies that have operations overseas; 3) Countries affected by US tariffs will retaliate with tariff barriers against US goods and services.

22:28 – 22:36 — (CH) – Asks – What will be the economic consequences of the tariffs? And then let’s talks about this unregulated federal capitalism.

22:36 – 24:17 — (RW) – Tariffs create something useful for Trump. First, all kinds of industries are now going to adjust to these tariffs, and he hopes, they will support him because they don’t want the removal of the tariffs that they just spent money adjusting to. // It’s like anything he does – trying to get a political base big enough to survive, which seems to be all he mostly cares about // Second, it means every business has to adjust, which is costly and doesn’t get them any more output; it’s a big burden. And it can create uncertainty when he changes his mind and gives some countries exemptions; uncertainty has real costs // Third and finally, everybody tries to save themselves and excludes collective efforts to resolve problems.

24:17 – 24:20 — (CH) – Where are we headed if this trajectory continues?

Without a people’s movement, this economic system will spin out of control and destroy itself

24:20 – 25:09 — (RW) – We have two options. We either let Trump do his thing and show him deference, which is what the senior Democrats in Congress have been doing. Or we learn the lesson of the great depression – there has to be a movement from below, otherwise there’s no counterforce that can take us in another direction. Absent that counterforce we’re going to see this system spinning out of control and destroying itself in the very way its critics have for so long foreseen that it might.

25:09 – 25:16 — (CH) – Which will mean what? The dollar is no longer the reserve currency; huge contraction of the economy?…

25:17 – 25:39 — (RW) – Deals made by our trading partners – that they can’t work with us so they choose to work among themselves. The Russians and the Chinese; the Europeans with the Russians and the Chinese; Asia, Africa, Latin America will have to wonder what kind of future they will have with an operator like this …

25:39 – 25:53 — (CH) – So this in essence becomes a multipolar world, which means that instead of this gradual decline would really mean a pretty catastrophic economic meltdown for the US.

The system is unsustainable and potentially explosive

25:53 – 26:38 — (RW) – Right. What we saw when Trump announced his big tariffs on China, we saw the stock market drop 700 points in a day. That’s a sign of the anxiety, the danger even in the minds of capitalists about where this is going. Just as we saw Warren Buffett and others say years earlier, you can’t keep taxing this way when I pay less than my secretary because it is unsustainable. It’s an explosive situation.

26:39 – 26:51 — (CH) – We don’t talk about it … We talk about porn stars suing Trump, or demonizing Russia – the nature of the crisis is never named and never addressed.

Everything is done to avoid asking the question – Is capitalism the problem

26:51 – 27:31 — (RW) – No. Everything is done to avoid asking the question: To what degree is the system we have in place – capitalism – the problem? No. It’s the Russians, it’s the immigrants, it’s the tariffs. It’s anything else – even the porn star – to distract us from the debate we need to have that we haven’t had for half a century, which puts is in a very bad place. We’ve given a free pass to a capitalist system because we’ve been afraid to debate it. And when you give a free pass to any institution, you create the conditions for it to rot right behind the façade, and that’s what I think is happening.

27:31 – 27:35 — (CH) – How do you look at the Trump presidency in the last minute that we have?

Trump is doing all he can to “grab it all before it disappears”

27:35 – 28:03 — (RW) – It’s the last gasp for me. It’s letting it all hang out. A system that’s going to do whatever it can, take advantage of this moment, grab it all before it disappears. A deluge – when I look at Trump that’s what I see.